SCHERERVILLE | A roller skating rink at Omni 41 Health and Fitness Connection may provide fun and fitness but isn't generating a tax break for St. Margaret Mercy Healthcare Centers.

Indiana Tax Court Judge Thomas G. Fisher recently ruled against the hospital system, which was appealing earlier unfavorable decisions by the Lake County Property Tax Assessment Board of Appeals and the State Board of Tax Commissioners.

Hammond attorney Robert A. Anderson, who represents the hospital, said Friday, "We are disappointed in the ruling. There is some precedent for public recreational facilities being exempt. The judge just didn't see it our way, and we respectfully disagree."

St. John Township Assessor Hank Adams, who has urged the reduction of tax exemptions for nonprofits that appear to compete with taxable businesses, said he is pleased with the decision.

The court's order states Omni is one of 18 nonhospital facilities St. Margaret operates in Northwest Indiana. The 160,804-square-foot facility contains a fitness center, a pediatric rehabilitation center and the skating rink.

St. Margaret received a charitable purposes exemption on 76 percent of Omni's square footage for the 1998 tax year, but the Lake County Property Tax Assessment Board of Appeals revoked Omni's exemption the following year on grounds Omni didn't meet the state definition of an exempt use.

St. Margaret appealed unsuccessfully first to the State Board of Tax Commissioners and then to the tax court.

Both sides agreed Omni's pediatric rehabilitation portion qualifies for an exemption and the fitness center did not -- leaving the skating rink as the remaining point of contention.

St. Margaret argued the roller rink is entitled to a charitable-purposes exemption because it provides an environment for members of the community to exercise and socialize at the cost of only a nominal fee, according to the court's ruling.